'You can't stop people watching': why BBC subscriptions are a long way off

When the BBC gathered its top on-screen stars and off-screen producers for a drinks party at the top of London’s Walkie Talkie skyscraper last week, the message was clear: we might not be able to compete with Netflix on money – but our licence fee model means we can nurture and promote your work to the whole of Britain in a way that no other broadcaster can.

The culture secretary, Nicky Morgan, then opened a can of worms on Wednesday afternoon when she declared at a hearing of the culture select committee that she was “open-minded” about switching the corporation’s funding model to a Netflix-style subscription model, potentially breaking up the way the BBC operates.

The idea of replacing the £154.50-a-year TV licence – payable by all households where individuals watch live television or use the BBC’s iPlayer streaming service – with a subscription has grown in the popular imagination as Britons become increasingly used to watching Netflix and less reliant on traditional TV channels.

Government sources have since talked down the idea that Morgan’s comments – made during a hearing otherwise largely focused on the prime minister’s connections with the tech entrepreneur Jennifer Arcuri – are an indication of a future Conservative manifesto commitment. They point out that Morgan went on to tell MPs that she hadn’t “seen any evidence either way that says what a subscription-based system would do in terms of revenue” and that any solution needed to find ways of replacing the BBC’s £3.7bn annual licence fee income.

No one is really sure how you could implement a password-protected subscription to the BBC and maintain the broadcaster in its current sprawling form.

Gill Hind, of media analysts Enders, said it would take decades to reach a switchover given the broadcaster’s output is still mainly consumed over traditional free-to-air television and radio stations: “How do you suddenly stop someone someone watching BBC One when it’s free to air on Freeview? You can’t do it until the whole world is online.”

Other free services such as the incredibly popular BBC News website would have to disappear behind a paywall, while the public have historically been upset at the prospect of adverts appearing on BBC radio or television.

Hind said another conundrum was how to maintain the current breadth of BBC services if people start picking and choosing their favourite aspects, with potentially major implications: “Your licence fee pays for everything, from news to sport to light entertainment and natural history. How do you go about slicing and dicing each of those individual parts? You have to think of the importance, especially nowadays, of having a good broadcast news service on TV and radio. The BBC gets across cultures and beliefs of different parts of the UK, while Netflix has a US-centric view of the world.”

There is also the legal reality that Morgan and the current Conservative government have little ability to rip up the BBC’s funding model. The Royal Charter – the document that underpins the corporation’s existence – guarantees the existence of the licence fee as a model for funding until at least 2027.

Although negotiations over the next licence fee settlement, which will determine how much money the BBC has to spend from 2022 onwards, are on the horizon, the government will not be able to challenge the entire existence of the model. For its part, the BBC will be hoping to avoid a repeat of the last negotiations, which saw it saddled with the cost of free licence fees for over-75s, forcing it to make deep cuts.

Despite this, other funding models are being monitored by UK politicians and regulators. Many European public broadcasters are abandoning the licence fee system, with Sweden the latest country to move to a system whereby individuals are charged a television levy through income tax.

There are storm clouds on the horizon, not least because the BBC is finding it more difficult to reach younger and BAME audiences – undermining its claim to universality. Complaints have also been exacerbated by the growing willingness on all sides of the political divide to criticise the BBC’s news output amid the chaos of the Brexit debate, with an Ofcom investigation ongoing into perceived bias in the corporation’s news output.

But the theory within the BBC is that people are happy to knock the corporation until they face up to the reality that they would lose a specific favourite service.

“The BBC produces a whole load of programmes that just wouldn’t get made, brings on talent and is one of the few British brands with true global reach,” said one BBC executive, who pointed out that support for a subscription service could plummet if people found out that a specific radio station or children’s programme or big Saturday night show such as Strictly Come Dancing would have to be cut. “Every service we do is valued by someone.”